Soften climate change or suffer it, the cost will anyway be huge

Giles Merritt says in the second of three articles before the COP26 summit in Glasgow that rich countries must budget for substantially greater spending to limit climate change. The choice they face is between paying the mounting costs of mitigating it or of suffering its catastrophic effects.

The world’s rich nations are aggravating the climate crisis. Although many see themselves as standard-bearers in the fight against global warming, the reality is very different.

It’s true that industrialised countries have been in the lead with their game-changing green technologies, their growing shift towards responsible investing and the UN-based drive for international targets. But they have been significantly less helpful on investing to confront the environmental difficulties of poorer countries.

Wealthier countries baulk at any suggestions they should help to finance the conservation of rain forests and other natural resources, but the reality is that climate change is already creating unimaginable costs. Soon the choice may be between saving Amazonia or erecting sea walls around coastal cities like London or New York.

If the idea of a vastly expensive global strategy funded by G20 taxpayers sounds Utopian, it’s worth considering how climate change is ‘re-landscaping’ our world. Russia has lately become the leading producer of wheat, while Egypt, once ‘the world’s granary’, is seeing its harvests shrink alarmingly. A 70 per cent increase in cereals and rice production is needed by 2050 to feed the world’s hungry billions, and that too threatens dire environmental consequences.

What if Glasgow produces little more than a re-run of earlier COP summits, with the 196 participating governments squabbling over burden-sharing and rejecting calls for a global carbon tax? It could be that public opinion in G20 countries, enflamed by surging natural disasters, will exert much more pressure, and in unpredictable ways.

Public debate on climate change has been lamentably simplistic. There is much ecological information about threatened species and alarming macro-facts about melting ice caps and shrinking forests, but almost nothing about the economic factors involved. Politicians pander increasingly to green votes, but shy away from discussing the financial implications.

The Paris-based International Energy Agency reportedly estimates that $5 trillion yearly is needed to fund the global transition to green energy. Such a massive investment over the course of this decade up to 2030 would in large part have to be earmarked for poorer countries.

To put that sum in context, if grossed up over a decade it’s about the same as the combined annual GDPs of all the industrialised nations. Put another way, $5 trillion a year represents a tenth of the total economic output of the G20 nations.

So far, they are a long way short of financing poorer countries’ needs in areas ranging from development assistance to healthcare, to say nothing of environmental policies. Rich nations’ governments have lately signed up to an IMF initiative to funnel $650 billion of newly-created ‘Special Drawing Rights’ for Covid-related funding to the hardest-hit countries. And the US also plans to give $5.7 billion a year in climate finance from 2024 onwards. However, these schemes barely dent the world’s clean energy challenges.

Where we’ll go from here is anyone’s guess. Whatever official spokesmen will doubtless be claiming in Glasgow, progress clearly won’t be fast enough or go far enough to counter accelerating climate change.

What’s needed is a radical re-think of the international mechanisms and institutions – notably the UN’s Intergovernmental Panel on Climate Change – whose efforts have been so far been consistently watered down. Our world is trying to confront an existential threat of the 21st century with 20th century methods, and that risks being our epitaph.

This is the second in a three-part article by the Founder of Friends of Europe on the radical re-thinking needed to confront the challenges of climate change. The first part was published on 7 September and the concluding article is to appear on 5 October.

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